Gold may climb to record $1,650 an ounce on Fed easing

October 13, 2010 by · Leave a Comment
Filed under: Commodities News 

I love the $1,650 call by Goldman Sachs.  1650 is the magic number these days, I wonder where I heard that before (*cough Jim Sinclair *cough).  Gold is really breaking out, currently last time I checked it is at $1,370 per ounce.  We are seeing the reaction to the multi-trillions of new debt we are creating.  Its a total debasement of the U.S. dollar.

As long we continue this path, gold is going higher and the dollar will continue to lose value.   The USDX (Weighted currency index) is at 77, (70) is the lowest it has been recorded at.   Goldman stated in this article that gold prices will come down when the economy recovers.  This may be true but we will need to see major cuts in federal spending and much higher taxes.   Right now, gold is being re-monetized as money and if this fully occurs then even if the U.S. dollar regains confidence, people may still use gold to store wealth because they are not certain if our politics will not revert back to the same old games we have been running in this country since the end of WWII.

Bloomberg – Gold may rally more than 20 percent from this month’s record to a high of $1,650 an ounce in 12 months as the Federal Reserve takes action to stimulate the U.S. economy, according to Goldman Sachs Group Inc.

Bullion may gain to $1,400 an ounce in three months and $1,525 an ounce in six months, analysts David Greely and Damien Courvalin wrote in a note dated yesterday. Gold for immediate delivery reached an all-time high of $1,364.77 on Oct. 7.

The Fed is considering whether to add to its purchases of Treasury bonds to spur the economic recovery, an action known as quantitative easing. The central bank may next month announce purchases of about $500 billion, Goldman Sachs said in a separate e-mailed note.

“With U.S. real interest rates pushing lower off the slowdown in the pace of the U.S. economic recovery and the growing prospect of another round of quantitative easing, we expect gold prices to continue to climb,” New York-based Greely and Courvalin wrote.

Spot bullion fell 0.3 percent to $1,349.90 an ounce at 2:50 p.m. Melbourne time, declining for the first time in three days. Gold for December delivery on the Comex in New York dropped 0.3 percent to $1,350.80. The bank in August forecast that gold may rally to $1,300 an ounce in six months.


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